Morning Call For Monday, Sept. 11
OVERNIGHT MARKETS AND NEWS
Dec E-mini S&Ps (ESZ17 +0.47%) this morning are up +0.55% at a 1-week high and European stocks are up sharply by +1.18% at a 3-week high after the impact of Hurricane Irma is smaller than initially feared and as North Korean tensions eased after it did not conduct a missile test over the weekend. Strength in energy stocks is also giving stock indexes a boost with Oct WTI crude oil (CLV17 +0.57%) up +0.74% after Saudi Arabian Energy Minister Khalid Al-Falih said it is open to the extension of OPEC crude production cuts "beyond the first quarter, if needed." Asian stocks settled mostly higher: Japan +1.41%, Hong Kong +1.04%, China +0.33%, Taiwan -0.36%, Australia +0.71%, Singapore unch, South Korea +0.78%, India +0.61%. An easing of North Korean risks helped boost Asian markets as did strength in suppliers to Apple on anticipation the company will unveil its iPhone 8 and iPhone 8 Plus models at an event on Tuesday.
The dollar index (DXY00 +0.23%) is up +0.14$. EUR/USD (^EURUSD) is down -0.21% after ECB Executive Board member Coeure warned that strength in EUR/USD could further depress inflation. USD/JPY (^USDJPY) is up +0.63%.
Dec 10-year T-note prices (ZNZ17 -0.26%) are down -9 ticks.
ECB Executive Board member Coeure warned that strength in EUR/USD could depress inflation unless it's offset by a strengthening economy when he said, "Exogenous shocks to the exchange rate, if persistent, can lead to an unwarranted tightening of financial conditions with undesirable consequences for the inflation outlook."
China Aug CPI rose +1.8% y/y, stronger than expectations of +1.6% y/y and the fastest pace of increase in 7 months. Aug PPI rose +6.3% y/y, stronger than expectations of +5.7% y/y.
U.S. STOCK PREVIEW
Key U.S. news today includes: (1) Treasury auctions $24 billion of 3-year T-notes, (2) USDA weekly grain export inspections, (3) USDA crop conditions and progress report.
Notable Russell 1000 earnings reports today include: none.
U.S. IPO's scheduled to price today: none.
Equity conferences this week: Society for Bone and Mineral Research Meeting on Mon, Electronic Design Innovation Conference on Mon, European Society for Medical Oncology Congress on Mon, Stifel Baltusrol Executive Summit on Mon, Morgan Stanley Global Healthcare Conference on Mon-Wed, Capital Link Shipping, Marine Services & Offshore Forum on Tue, Citi Global Technology Conference on Tue, Raymond James North America Equities Conference on Tue, UBS Best of Americas Conference on Tue, Wells Fargo Net Lease REIT Forum on Tue, Barclays Global Financial Services Conference on Mon-Wed, Bank of America Merrill Lynch Global Real Estate Conference on Tue-Wed, Credit Suisse Basic Materials Conference on Tue-Wed, Deutsche Bank Technology Conference on Tue-Wed, Goldman Sachs Communacopia Conference on Tue-Thu, Bank of America Merrill Lynch European Credit Conference on Wed, KeyBank Capital Markets Basic Materials Conference on Wed, Bank of America Merrill Lynch Global Health Care Conference on Wed-Thu, Morgan Stanley Industrials Conference on Wed-Thu, Morgan Stanley Laguna Conference on Wed-Thu, Royal Bank of Canada Global Industrials Conference on Wed-Thu, BMO Capital Markets Back To School Conference on Thu, C. L. King & Associates Best Ideas Conference on Thu, Pareto Oil & Offshore Conference on Thu.
OVERNIGHT U.S. STOCK MOVERS
Incyte (INCY -3.63%) was upgraded to 'Outperform' from 'Market Perform' at Raymond James.
Allegheny Technologies (ATI -3.03%) was upgraded to 'Buy from 'Hold' at Bank of America/Merrill Lynch.
Mastercard (MA +0.51%) was upgraded to 'Buy' from 'Neutral' at Guggenheim Securities with a price target of $153.
Alleghany Corp (Y +3.35%) was upgraded to 'Market Outperform' from 'Market Perform' at JMP Securities.
GrubHub (GRUB -1.75%) was downgraded to 'Neutral' from 'Outperform' at Credit Suisse.
MGM Resorts (MGM -2.18%) was downgraded to 'Hold' from 'Buy' at Deutsche Bank.
Kroger (KR -7.51%) was downgraded to 'Hold' from 'Buy' at Deutsche Bank.
Bank of America (BAC -0.35%) may move higher Monday Morning after Berkshire Hathaway late Friday confirmed a 6.6% stake in the company.
AveXis (AVXS -0.48%) may open lower Monday after Deerfield Management Co LP said it cut its stake in the company to 5.82% from 7.28%.
Cadence Design Systems (CDNS -0.49%) rose 3% in after-hours trading after it was announced that it will replace Staples in the S&P 500.
Whitestone Reit (WSR +1.25%) climbed nearly 4% in after-hours trading after it was announced that it will replace CDI Corp in the S&P SmallCap 600.
Callen Petroleum (CPE -6.29%) gained 3% in after-hours trading after it was announced that it will replace WebMD Health in the S&P MidCap 400.
MARKET COMMENTS
Dec S&P 500 E-mini stock futures (ESZ17 +0.47%) this morning are up +13.50 points (+0.55%) at a 1-week high. Friday's closes: S&P 500 -0.15%, Dow Jones +0.06%, Nasdaq -0.85%. The S&P 500 on Friday closed lower on global growth concerns after China Aug exports rose +5.5% y/y, weaker than expectations of +6.0% y/y and the smallest increase in 6 months. Stocks were also undercut by concern that damage from Hurricane Irma will undercut the U.S. economy and GDP growth.
Dec 10-year T-note prices (ZNZ17 -0.26%) this morning are down -9 ticks. Friday's closes: TYZ7 +13.50, FVZ7 +7.25. Dec 10-year T-notes on Friday fell back from a fresh contract high and closed lower on concern that the massive losses from damage caused by Hurricane Irma to the U.S. mainland will force insurance companies to sell some of their portfolios of Treasuries to raise cash to settle claims. T-notes were also undercut by increased inflation expectations after the 10-year T-note breakeven inflation rate rose to a 1-month high. T-notes earlier rallied to a contract high on speculation that the impact of Hurricane Irma may slow the U.S. economy by enough to keep the Fed from raising interest rates again this year.
The dollar index (DXY00 +0.23%) this morning is up +0.129 (+0.14%). EUR/USD (^EURUSD) is down -0.0025 (-0.21%) and USD/JPY (^USDJPY) is up +0.68 (+0.63%). Friday's closes: Dollar Index -0.311 (-0.34%), EUR/USD +0.0013 (+0.11%), USD/JPY -0.61 (-0.56%). The dollar index on Friday fell to a new 2-1/2 year low and closed lower on increased safe-haven demand for the yen as USD/JPY tumbled to a 9-3/4 month low on North Korean tensions. The dollar index was also undercut by comments from New York Fed President Dudley who said that with inflation below the Fed's 2% objective, it can afford to be patient on further rate hikes.
Oct crude oil (CLV17 +0.57%) this morning is up +35 cents (+0.74%) and Oct gasoline (RBV17 -1.90%) is down -0.0184(-1.12%). Friday's closes: Oct WTI crude -1.61 (-3.28%), Oct gasoline -0.0134 (-0.81%). Oct crude oil and gasoline on Friday closed lower on global economic growth concerns that may weigh on crude demand after China Aug exports and German Jul exports both were weaker than expected. Gasoline prices were undercut by the quick recovery of U.S. Gulf Coast refineries after Bloomberg data showed only 8% of U.S. refining capacity was still halted due to Hurricane Harvey.
Metals prices this morning are mixed with Dec gold (GCZ17 -0.88%) -9.4 (-0.70%), Dec silver (SIZ17 -1.56%) -0.198 (-1.09%) and Dec copper (HGZ17 +1.10%) +0.038 (+1.23%). Friday's closes: Dec gold +0.9 (+0.07%), Dec silver +0.007 (+0.04%), Dec copper -0.102 (-3.24%). Metals on Friday settled mixed with Dec gold at an 11-1/4 month high and Dec copper at a 2-week low. Metals prices were boosted by the slide in the dollar index to 2-1/2 year low and by increased safe-haven demand for precious metals on concern North Korea may launch an ICBM on Saturday. Copper closed sharply lower on concern a slowdown in China's growth may curb its copper demand after China Aug exports rose at the slowest pace in 6 months.
Disclosure: None.